The Importance of Demonstrating Substance in Malta and a Dixcart Solution to Make the Process as Straight Forward as Possible

Background

Many international organizations, such as the OECD, European Council and European Commission, are driving changes as to how businesses operate, with a focus on substance.  The international arena is changing, and with the implementation of Base Erosion and Profit Shifting legislation (BEPS) measures, it is becoming increasingly important to demonstrate real substance and genuine activity. Emphasis is placed on the requirement for an operation to have substance in the country or countries where activities are carried out.

Within international tax planning, substance has become an important consideration when setting up a new corporate structure and/or when restructuring an existing corporate structure.

Substance Considerations in Malta

There are no specific economic substance rules in Malta, but there are a number of recommendations that you should consider when setting up a company, to ensure that the company will remain tax resident in Malta.

  • Members of the board of directors – a minimum 50% of the board members should be Maltese resident;
  • The decisions of the board of directors should be taken in Malta and the minutes recorded locally through regular board meetings;
  • Creation of economic substance in Malta, by renting an office and employing personnel.

Factors that Assist in Establishing Substance in Malta

There are a number of factors that assist companies to meet the recommended substance requirements in Malta:

  • There is a large, well-educated pool of English speaking individuals available for employment. In recent years, in particular, there has also been an increase in affordable flexible working spaces.
  • Malta’s geographical location makes it an ideal jurisdiction, as a base to travel to Europe and further afield.
  • There are several financial assistance packages available to companies that set-up ‘real’ operations in Malta. A number of benefits relate to tax credits whilst other programmes reimburse successful applicants with up to 40% of their capital expenditure.

Benefits Available to Tax Resident Maltese Companies

Companies that are tax resident in Malta benefit from Malta’s full imputation system of taxation that allows generous unilateral relief and tax refunds.

  • Companies operating in Malta are subject to a corporate tax rate of 35%.  However, non-Maltese resident shareholders enjoy low effective rates of Maltese tax, as Malta’s full imputation system of taxation allows generous unilateral relief and tax refunds:
  • Active income – in most instances shareholders can apply for a tax refund of 6/7ths of the tax paid by the company on the active profits used to pay a dividend. This results in an effective Maltese tax rate of 5% on active income.
  • Passive income – in the case of passive interest and royalties, shareholders can apply for a tax refund of 5/7ths of the tax paid by the company on the passive income used to pay a dividend. This results in an effective Maltese tax rate of 10% on passive income.
  • Holding companies – the dividends and capital gains derived from participating holdings are not subject to corporate tax in Malta.
  • There is no withholding tax payable on dividends.
  • Advance tax rulings can be obtained.

Summary

Meeting the substance requirements increases costs for a company, but the potential risk of being challenged by the tax authorities, for a lack of substance, would definitely be far more costly and onerous, for the company to deal with.

How Can Dixcart  Help and the Dixcart Business Centre in Malta

Dixcart Management Malta Limited provides a comprehensive range of incorporation, secretarial and management services for companies registered in Malta, including companies and international companies that are managed through the Dixcart Malta office. 

Dixcart Malta has a Business Centre within our office building, and this Business Centre offers serviced offices and a productive work environment. It can be a cost-effective option for organisations with international interests, wishing to operate from Malta.

The Dixcart Business Centre is located in the prime area of Ta’Xbiex, close to the capital, Valletta. The building is iconic and has been faithfully restored to retain its boat like shape. It incorporates a delightful roof terrace and a unique and memorable bespoke chandelier in the reception area. An entire floor is dedicated to serviced offices. There are nine serviced offices in total, accommodating between one and nine people, there is a kitchen and a boardroom is available for meetings.

Additional Information

If you would like further information regarding companies and substance in Malta, please speak to Jonathan Vassallo: advice.malta@dixcart.com, at the Dixcart office in Malta or to your usual Dixcart contact.

Why is the Isle of Man a Preferred Jurisdiction for Corporate Structuring?

There are several advantages for using corporate structures, especially those registered in financial hubs such as the Isle of Man.

They can be used to help mitigate taxes, hold luxury assets, hold investment portfolios, or as part of appropriate succession planning (something Covid-19 has been a particular catalyst of).

Isle of Man companies benefit from a 0% standard rate of corporate income tax, 0% stamp duty, 0% capital gains tax and no annual filing of accounts for private companies.  

What can you do with an Isle of Man Corporate Structure?

  • Own assets such as ships, aircraft and works of art.
  • Hold UK or foreign property.
  • Hold investment portfolios and participations in other companies. This is due to the zero rate of tax on such activities and where withholding taxes on dividend income from such companies may not apply.
  • Hold intellectual property.
  • Act as an employer for international workers.
  • Receive international income, commissions, and royalties.
  • Be part of business structuring and re-structuring.
  • Convert immovable assets, such as land, into movable assets, such as shares.
  • Incorporate as part of succession planning and asset protection.
  • Incorporate as part of tax planning.
  • Isle of Man companies wishing to borrow money from banks benefit from being in a well-regulated jurisdiction with a public register of mortgages and other charges.

Formation of Companies in the Isle of Man

Isle of Man companies can be formed and regulated under two separate Acts: the Isle of Man Companies Act 1931 and the Isle of Man Companies Act 2006. More information can be provided on request.

Dixcart in the Isle of Man can provide full management and control of companies, as well as offering advice regarding the statutory obligations for companies incorporated in the Isle of Man and compliance with substance rules requirements. 

The Isle of Man is home to businesses operating in a wide variety of sectors.  The Manx Government has actively encouraged the financial sector. Consequently, the island is extremely well served by international service providers, fully licensed and regulated banks, and insurance companies.

Dixcart provides a comprehensive incorporation service in the Isle of Man. We initiate the organisation and incorporation of companies in many locations around the world and can provide ongoing management and secretarial services to those companies. Dixcart managed companies are established with a complete corporate organisation. This includes the maintenance of statutory records, preparation and completion of financial statements and full documentation relative to the operation of the company. Dixcart can also assist with serviced office and support facilities for clients requiring a physical presence on the island. 

We have a strong network of contacts within the wider professional and commercial sectors, both on and off the island, and can introduce businesses to relevant individuals where appropriate.

If you require additional information regarding this subject, please contact Steve Doyle in the Isle of Man office: advice.iom@dixcart.com.

Dixcart Management (IOM) Limited is licensed by the Isle of Man Financial Services Authority

Importance of having a will

Key Factors Which Impact on International Company Structures

This Article identifies three important trends that need to be considered by companies operating internationally:

  • Tax structuring and the increasing emphasis on transparency and compliance
  • Global technologies and emerging markets
  • Increasing importance of the flow of information

Each of these has a significant impact on the most appropriate corporate structure to achieve long term goals.  

Tax Structuring: Tax Transparency, Compliance and Social Responsibility

Changes in the law and public opinion in recent years, have made companies recognise that their tax affairs need to be, not only transparent and compliant, but also that they need to be seen to be responsible and to be paying a ‘fair’ amount of tax.

The United Nation’s Sustainable Development Goals (SDGs) were detailed in 2012, and consist of 17 goals that focus on economic growth, social development and environmental protection for countries and their populations. These goals require significant investment and the implementation of effective tax systems to generate the resources needed. Developing countries are being encouraged to reduce tax leakage and to direct tax revenue gains towards those most in need.

International tax cooperation and enhanced exchange of information, under the automatic exchange of information standards developed by the OECD and the G20, are additional measures designed to reduce tax evasion and under reporting of tax revenue.

The move to regulate fiscal behaviour is ongoing. International government organisations and domestic tax authorities have issued rules and legislation to curb tax evasion. For example, BEPS (OECD), ATAD (EU), and a large number of institutions and regulatory bodies are putting measures in place and re-affirming this approach.

Rules on mandatory reporting of certain tax transactions was adopted by the Economic and Financial Accounts Council (ECOFIN) of the European Commission in 2018, and exchange of this information by all member states of the EU, commenced in October 2020. 

The priority for professional advisers, such as Dixcart, continues to be to  help minimise a company’s tax cost whilst at the same time ensuring full compliance with laws and regulations relating to the company’s tax affairs.

Global Technologies and Emerging Markets

Innovation has become increasingly global due to the rate and variety of technological advances. Globalisation has led to  tasks that were performed at a single location within one country, being spread across different locations and countries.

The advantages include; carrying out the work where the best expertise exists, lower costs, and potentially mitigating risk by using alternative centres for production and/or service provision.

Internationally, China and India are now major sources of global demand, each with distinct consumer needs. In addition, both countries  are becoming sources of talent for developing new products and processes.

On the customer side, many organisations have been making efforts to move faster, and make more decisions locally. Simultaneously there have been opportunities to re-assess functions such as product development and R&D, relocate them, possibly across several countries, and integrate them across the world.

The world today is far more integrated than ever before but the rising friction between China and the US could weaken this. Covid-19 has not helped either.  The pandemic has made countries inward looking, and the demand for self-sufficiency has risen especially with regard to products relevant to health.  Hopefully, this will be a momentary ‘blip’ as the costs of deglobalisation could be high.

 Increasing Importance of the Flow of Information

The digital revolution and remote working, which has accelerated significantly in 2020 and 2021 due to Covid-19, mean that organisations need to place great emphasis on the efficient flow of information, and this increases the need to keep employees happy and engaged. Each employee needs to be enabled to think and communicate effectively.

Communication and collaboration are now far more important and increasingly employees are asked for their input and are involved in helping an organisation move forward, in the right direction.

Increased accountability is now expected across the employee spectrum and there is a deeper appreciation that communication and organisational structure is central to a businesses’ success, as well as to its culture and values.

Summary and Additional Information

If you would like to discuss any of the matters raised in this Information Note, or have any other questions, please contact Laurence Binge at: advice@dixcart.com.

Corporate – Team Introduction

The Team and Activity

Each of the ten Dixcart offices has a team of professional advisers with expertise in the area of; corporate structuring, establishment and management.

Laurence Binge from the UK office and Clive Azzopardi from the Dixcart office in Malta are two of the team members we are introducing to you today.

Services Available across the offices

The Dixcart Group has been providing corporate services for almost 50 years.

Dixcart has extensive expertise in advising both private and institutional clients – helping them to organise their affairs, to achieve their corporate objectives in a compliant manner. Frequently this will entail using companies, trusts and foundations in one or more jurisdiction.

Acting as professional advisers and Corporate Service Providers, we regularly incorporate companies in the jurisdictions where we have offices: Cyprus, Guernsey, Isle of Man, Malta, Nevis, Portugal (mainland and Madeira), South Africa, Switzerland, and the UK. We can also assist in coordinating the establishment of companies in other jurisdictions, through our network of contacts.

Dixcart not only establishes the companies but also provides a comprehensive range of company management, advisory and compliance services, including:

  • Day to day administration and company secretarial services
  • Director services
  • Registered office and agent services
  • Tax compliance services
  • Accountancy services
  • Dealing with transactions, for example, all aspects of acquisitions and disposals

Introduction to Laurence Binge and to Clive Azzopardi

Laurence Binge has worked for the Dixcart Group for almost thirty years and is a Chartered Accountant (England and Wales). He was appointed a Director of Dixcart International Limited in: 1995.  He works at the Dixcart office in the UK.

Clive Azzopardi joined the Dixcart office in Malta in 2015 and was appointed a Director in 2018. He is a member of the Association of Chartered Certified Accountants, the Malta Institute of Management, and the Malta Institute of Accountants

Laurence Binge – laurence.binge@dixcart.com

Laurence Binge

Laurence Binge qualified as a Chartered Accountant in 1985. Before joining the Dixcart Group in 1992, he spent six years in general practice.

Over the years, Laurence has become a trusted adviser on taxation, corporate governance, domicile, residence and family office issues to a number of international entrepreneurs and their families. He believes you should never let the tax tail wag the dog. The most important thing is to have the right structure in place to make a business work. If you are not in the right place at the right time, with the right team, there may well be no profits to worry about taxing.

Laurence offers extensive expertise in relation to corporate structures, in particular UK Holding Companies. He is fully conversant with the opportunities available through the UK’s outward looking approach post-Brexit and has a high level of knowledge regarding international taxation issues.

Laurence is on the Board of a number of client companies, where his general commercial and tax knowledge is highly valued. He is a Director on a dozen hospitality related companies and, through Dixcart International Limited, provides UK Director services to several clients.

During his time at Dixcart, Laurence has assisted with the establishment and management of a number of the Dixcart offices, particularly Malta and the Isle of Man. He frequently visits/liaises with all of the offices across the Group, and, when able, often travels – particularly to India and South Africa, where many of his current clients are based.

Clive Azzopardi – clive.azzopardi@dixcart.com

Clive Azzopardi

Clive joined the Dixcart Malta office in November 2015. He was appointed Head of Client Relationships at Dixcart Management Malta Limited in January 2017, and a Director in 2018. His role is to manage and coordinate the different teams in the Accounts Department, to deepen the relationships with existing clients and to oversee the day to day operations of the company.

Clive is an expert regarding Malta companies, the tax efficiencies that they offer, and the circumstances when they are most appropriate to use, in an international context. Since June 2020, he has been a Governor on the Finance Malta’s Board of Governors. Finance Malta is a non-profit, public-private initiative, set up to promote Malta as an international business and financial centre within, as well as outside, Malta.

Dixcart Management Malta Limited provides complete management and support services for companies incorporated in Malta, and with Clive’s experience in overseeing the accounting management of the Malta office, he is able to assist clients in a similar capacity. This includes full accounting support, secretarial support, preparation of financial statement and fulfilling the tax compliance obligations that companies must meet.

He is a member of the Association of Chartered Certified Accountants, the Malta Institute of Management and Malta Institute of Accountants. Before joining Dixcart, Clive gained nine years of experience in the financial services sector working at two different corporate service providers in Malta.

Cyprus

Three Routes For Non-EU Citizens to Gain Residence in Cyprus

Background

Cyprus offers three options for non-EU nationals to acquire residence. Each of these residence routes offer the additional advantage of leading to Cyprus citizenship, as long as the relevant criteria are met.

The three routes are:

  • Permanent Residence Permit
  • Temporary Residence Permit through the establishment of a Foreign Interest Company
  • Temporary Residence Permit through the establishment of a Small and Medium Sized Innovative Enterprise (“Start-up Visa”)
  • PERMANENT RESIDENCE PERMIT

Cyprus has been a member of the European Union since 2004 and in order to attract additional foreign investment the Cyprus government introduced the Permanent Residence Permit scheme. Through this programme, non-EU nationals can guarantee their residence in the EU.

Requirements

The requirements for the Cyprus Residence Permit scheme are:

  • Make an investment of at least €300,000, in one of the following investment categories:
    • Purchase residential real estate (house/apartment) by a Land Development company in Cyprus, which should relate to a first sale of at least €300,000 (excluding VAT). At least €200,000 must be paid as the Sale Contract is signed and prior to the application for the Permanent Residence Permit.
    • Investment in real estate (excluding houses/apartments): Purchase other types of real estate, such as offices, shops, hotels, or related estate developments of a combination of these, with a total value of €300,000 (excluding VAT). Re-sale properties are acceptable.
    • Investment of at least €300,000 in the share capital of a Cyprus company, which is based and operates in Cyprus, has substance in Cyprus, and employs at least 5 people in Cyprus.
    • Investment of at least €300,000 in units of a Cyprus Investment Organisation of Collective Investments (type AIF, AIFLNP, RAIF).
  • Provide evidence of a secure annual income of at least €30,000. This required annual income, increases by €5,000 for every dependant person, and by €8,000 for every dependant parent or parent-in-law.

Other Criteria

The residence permit does not allow the applicant and his/her spouse to undertake  any form of employment in Cyprus.

Residence permit holders are however permitted to own Cyprus companies and to receive dividends.

Holders of the residence permit must visit Cyprus once every two years.

A clean criminal record, issued by the authorities of the country of existing residence, needs to be provided upon submission of the application.

Family Members

Residence permits can also be issued to the investors’ spouse and all financially dependant children. The applicants’ parents may also be granted a permit.

The Option of Cyprus Citizenship

If the holder of a Permanent Residence Permit resides in Cyprus, this may make them eligible for Cyprus citizenship by naturalisation.  Such a residence permit holder would need to reside in Cyprus for seven years, in any ten calendar year period.

  • TEMPORARY RESIDENCE PERMIT VIA THE ESTABLISHMENT OF A FOREIGN INTEREST COMPANY

Key Features of a Cyprus Foreign Investment Company

A Cyprus Foreign Investment Company (FIC), is an international company which can employ non-EU nationals in Cyprus. Such a company can obtain work permits for relevant employees and residence permits for their family members.

Main Criteria

The main criteria for a Cyprus FIC are:

  • The third country shareholder(s) must own more than 50% of the total share capital of the company.
  • The third country shareholder(s) must contribute at least €170,860 to the share capital of the company. This investment can be used, at a later date, to fund future expenses incurred by the company when it is established in Cyprus.

Main Advantages

A key advantage is that after residing for seven years in Cyprus within any ten calendar year period, third country nationals can apply for Cyprus citizenship.

In the shorter term:

  • FICs can employ third country nationals, who can apply for appropriate residence and work permits, each of which will be valid for up to two years and are renewable.
  • Employees can exercise the right for their families to join them in Cyprus.
  • The corporate tax in Cyprus is at a competitive level of 12.5%.
  • A Cyprus FIC can also apply for the Notional Interest Deduction Regime, which reduces corporate taxation, by treating new equity in the same way as debt. Please contact Dixcart for more information: advice.cyprus@dixcart.com
  • Cyprus has Double Tax Agreements with almost 60 countries.
  • Dividend income is exempt from corporate and individual taxation
  • Dividend distribution to shareholder(s), is exempt from withholding tax.
  • TEMPORARY RESIDENCE PERMIT VIA THE ESTABLISHMENT OF A SMALL AND MEDIUM SIZED INNOVATIVE ENTERPRISE (START-UP VISA)

The Cyprus ‘Start-up Visa’

The Cyprus Start-up Visa Scheme allows entrepreneurs (individuals or in a team), from third countries (outside the EU and outside the EEA), to enter, reside and work in Cyprus in order to establish, operate, and develop a start-up business.

Who Can Benefit from the Scheme?

  1. Individuals

Non-EU country nationals who are the founders or owners of an enterprise that meets the following requirements:

  • the enterprise must be innovative – research and development costs must  represent at least 10% of its operating costs, in at least one of the three years preceding the submission of the application, as certified by an external auditor. In the case of a new enterprise, without any financial history, the evaluation will be based on a Business Plan that must be submitted to the Ministry of Finance.
  • the Business Plan must provide that the enterprise’s head office and tax domicile will be established in Cyprus.
  • Teams

Team consisting of non-EU nationals:

  • Founders that consist of a maximum of five individuals, or at least one founder plus other senior executives, up to a maximum of five individuals. The senior management must be to C-suite level employees (managers).
  • The team must own more than 50% of the company shares.
  • The founder must have access to a minimum €10,000. Where there are more than two founders, the total capital must be a minimum €20,000.
  • At least one of the team members holds an undergraduate or equivalent professional qualification.

The requirements mentioned above, relating to individuals and the enterprise criteria, also apply to team applications. 

What are the Benefits of the Start-up Visa Scheme?

  • Individuals and team members, approved under the Start-up Visa Scheme, will benefit from the right to undertake economic activity and to  reside in Cyprus for one year, with the option of renewing this for at least another year.

They have the right to self-employment and/or the right to paid employment in the company registered under the Start-up Scheme in Cyprus, with the prospect of permanent residence in Cyprus, as long as the business ‘succeeds’. Additional family members can move to Cyprus and a specified number of individuals from non-EU countries, can be employed, without prior approval from the Department of Labour, again assuming the success of the business. Success or failure of the business, will be assessed at the end of the second year of trading.

  • Amendments to the Income Tax Law mean that there are special tax incentives for ‘natural persons’ who are investing in innovative companies.

The type of investment subject to the tax reduction include: the capital investment, investment in debt instruments, investment in loans, follow-on investments. The tax reduction can be up to a maximum 50% of the investor’s taxable income in the year that the investment takes place. The amount of the tax reduction cannot be greater than €150,000 per year. It is possible for the tax reduction to be carried forward and enjoyed anytime during the five years following the investment.

Additional Information

If you require any further information, please contact Robert Homem or Katrien de Poorter, in the Dixcart office in Cyprus: advice.cyprus@dixcart.com.

Swiss companies

Swiss Corporations: Stability In A Volatile World

Recent events around the world mean that stability, security and reputational issues have become even more important. This applies to corporate structures as well as to many other areas of international life.

Swiss companies offer this as well as a number of potential tax efficiencies.

Advantages

Switzerland offers a number of advantages as a location for international companies:

  • Located in the centre of Europe.
  • Economic and political stability.
  • High regard for personal privacy and confidentiality.
  • An exceptionally ‘innovative’ and ‘competitive’ country, with numerous strong industries.
  • A well respected jurisdiction with an excellent reputation.
  • A high quality and multilingual local workforce.
  • Low rates of corporate tax for Swiss companies.
  • Premier destination for international investment and asset protection.
  • Major commodity trading centre in the world.
  • Hub for HNWIs, international families and a wide variety of professionals including: lawyers, family offices, bankers, accountants, insurance companies.

A Favourable Tax Environment for Companies and Foreign Investors

The Swiss tax regime for companies is attractive as summarised below:

  • Swiss trading companies are taxed at between 12% and 14%.
  • NO corporate tax on dividends received from qualified participations and no capital gains.
  • NO tax on dividend distributions to shareholders based in Switzerland and/or a country in the EU.

Swiss Company Taxation

The Swiss federal tax rate is consistent across Switzerland, but corporate tax rates (federal tax, plus cantonal tax) vary across different Swiss cantons, depending on the specific approved cantonal tax rate.

Since January 2020, the corporate tax rate (combined federal and cantonal tax) for trading companies in Geneva, has been 13.99%.

Swiss Holding Companies benefit from a participation exemption and do not pay income tax on profits or capital gains arising from qualifying participations. This means that a pure Holding Company is exempt from Swiss tax.

Swiss Withholding Tax (WHT)

There is no WHT on dividend distributions to shareholders based in Switzerland and/or in the EU (EU Parent/Subsidiary Directive). 

Switzerland is not in the EU, but is in ‘Schengen’.

Double Tax Treaties

Switzerland has an extensive double tax treaty network, with access to tax treaties with over 100 countries.

If shareholders are domiciled outside Switzerland and outside the EU, and a double tax treaty applies, the final taxation on distributions will generally be between 5% and 15%.

Patent Box

Net profit from domestic and foreign patents are taxed separately with a maximum reduction of 90% (precise rate depending on the specific canton). This Patent Box Regime meets the OECD2 standard and the 90% maximum relief is mandatory at the cantonal level.

Before the Patent Box is applied for the first time, the corresponding tax deducted R&D expenditures must have been identified and taxed.

Additional Information

If you require additional information relating to Swiss companies and the advantages they can offer, please speak to Christine Breitler at the Dixcart office in Switzerland: advice.switzerland@dixcart.com.

UK

Global Britain – Outward Looking and Open for Business

Critics have claimed that the UK’s departure from the EU indicates that the UK is protectionist and less outward looking.  The reality is, that nothing could be further from the truth.

Leaving the EU has given the UK the chance to embrace a more global identity and establish new trade links with the rest of the world whilst preserving its trading relationship with the EU.

How Has the UK Done So Far?

A Brexit critic taunted “The UK has not negotiated an international trade deal in decades. The UK simply lacks the capacity.”  Two years later the UK has dumbfounded its critics having negotiated trade agreements with 63 countries plus the EU deal, which together cover £885 billion of UK trade.  No other country has ever negotiated so many deals simultaneously.

The UK has negotiated a unique deal with the EU which separates the UK from the EU but at the same time preserves quota and tariff free trade in goods.

Trade negotiations also continue with Australia and New Zealand as well as enhanced continuity deals with Canada, Mexico and Turkey.

The UK is also pushing to join the Pacific Nations Partnership. The UK’s inclusion in this bloc would increase the Global GDP that it represents to 17%, which is greater than the Global GDP represented by the EU.  If, as expected under Joe Biden, the US also joins this trading bloc, it will be the largest in the world.

An enhanced trade partnership was announced between the UK and India, on 10th February 2021: https://www.gov.uk/government/news/liz-truss-deepens-trade-ties-announces-investment-wins-in-india

Freedom of Movement

One of the consequences of  the UK leaving the EU is it will no longer be possible for Europeans to live and work in the UK without the necessary Visas.

The UK has introduced a new points based system, for those wishing to move to the UK. It believes this will enable the UK ambition to ‘build back better’, to be met, following the end of the coronavirus crisis.

The new system applies the same rules on migration to everyone, creating a level playing field which will enable the UK to attract the brightest and best regardless of where they come from.

Moving Forward

The UK Government intends to make it easier to invest in big manufacturing and research and development projects across the country.  It is to develop freeports to attract investment into deprived coastal areas.  There is also the intention to cut red tape to make it easier for businesses to flourish

Conclusion

The UK has made a good start in living up to its Global Britain vision.  It is also ahead of the curve on rolling the Covid vaccine out, which means that business will have the chance to recover and flourish sooner rather than later.

If you wish to explore setting up a business in the UK and want to take advantage of the level playing field with regard to migration to the UK please contact Laurence Binge: advice.uk@dixcart.com, or your usual Dixcart contact.

Private Wealth Trends as we Navigate Towards the New Normal

Background

As we start 2021, the Covid-19 pandemic remains prevalent across most of the world. Measures are starting to be put in place, in particular the introduction of vaccination programmes, that will hopefully bring the pandemic under control.

Behaviours and lifestyles have had to be dramatically altered. This has impacted on private wealth management, as much as almost every other sector of our lives. Some of these changes are likely to remain with us post pandemic. 

What are the New Wealth Management Trends?

  • Modified Perception: What is Wealth?

We are witnessing a re-assessment of key priorities.

The importance of family and health have been elevated significantly as have self-fulfilment and happiness. Financial gain naturally remains an important goal for wealth management but this is being balanced against priorities, many of which have been elevated to much greater importance during the past year.   

  • Increased Importance of Business Continuity for Family Wealth Management Planning

Contingency plans for business continuity and wealth management now need to take into account widespread country and regional lockdowns and quarantines, travel disruptions, and significant general disruption to businesses and communities.

Continuity plans need to be assessed and strengthened, where necessary, to build  capabilities now and in anticipation of recovery. These plans and contingencies need to be communicated to key internal and external stakeholders to enhance trust and transparency, and to help mitigate against potential  damage to the preservation of family wealth in the future.

  • Investor Preference for Lower Cost and More Passive Strategies

In general, there has been movement towards less risky and more ‘steady’ investment strategies. In a time of crisis, upheaval and volatility this is to be expected.

  • Client Preference for Less Risk and Additional Planning for the Future

Clients generally have a reduced risk appetite.

Covid-19 has also emphasised people’s mortality and there has been an increased  emphasis on succession planning and the sharing or moving on of responsibilities to the next generation.

As part of this process, clients have been drafting wills and/or reviewing and amending current wills.

  • Increasing Moves Towards Holistic Financial Planning and Philanthropy as a Key Objective

Dixcart has long believed in the advantages of holistic financial planning, by assisting with the management of our clients’ assets as a whole. Increasingly this is being recognised as the most effective way for the future, with a trusted adviser knowing the family members and appreciating and understanding their goals and the nuances of their specific wealth management plan.

In the post-pandemic world it is likely that there may be an increased desire by individuals to spread wealth to those less fortunate than others.

Philanthropy is increasingly becoming an objective for private wealth clients. Individuals can give directly to charity (‘chequebook philanthropy’) or more formal structures can be put in place, to provide an organised platform for giving, as well as offering important tax-planning benefits. It is important that this topic area is discussed with clients and accurately reflected in any wealth management plan.

  • Interaction with Clients Digitally – Rather than Face to Face

In many cases the only way to ‘meet’ the majority of clients has been on-line. This requires a different approach and discipline and an investment in appropriate and secure technology by professionals working with wealthy individuals and family offices, to retain relationships and maintain required support levels.

Whilst previously the older generation had, at times, been reluctant to adopt new technology, Covid-19 has provided a real incentive to embrace change. The inter-generational divide, in terms of technology use, is generally not as great as it was pre-pandemic.

Key business workflows are being ‘digitialised’ to accommodate changes in both client behaviour and employees working remotely. This trend is likely to evolve further and lead to the use of more interactive planning and performance reporting tools, initially in a virtual setting and, in the future, for in-person meetings.

With the increasing reliance on technology, the importance of cyber-security has been elevated to a much higher level. The training of family members and of staff to identify potential breaches, is becoming even more critical.

  • Collaboration Software is Changing the Way People Work

This trend is evident across a number of sectors, including private wealth.  

Wealthy families, as well as the professionals providing wealth management services, have needed to develop new methods of sharing resources across; families, teams and markets.

The new imperative is to provide access to expertise through a variety of different means, other than solely through geographic proximity and physical interaction.

The use of ‘secure team software’ is likely to continue. This applies to wealthy families with individuals located in a number of counties/locations as much as to Family Offices and private wealth managers.

Summary and Additional Information

As we slowly emerge from the recent upheaval and we move to the next ‘normal’, as in the past, the success of wealth management will depend on the ability of professional advisers to listen to clients and adapt to their changing needs. Wealth management specialists will also need to ensure that they are digitally intelligent, in terms of embracing revised means of keeping in touch with contacts and adopting more flexible wealth management operational systems.

  • Dixcart is well placed to meet these challenges. Getting to know our clients and really understanding their objectives, has consistently been our key priority. In addition, we embrace new technology and have our own IT department. The IT team works on projects across the Group, and has helped ensure that we have solutions in place, to communicate with each client in a meaningful manner, and in a way that is most appropriate to them.

If you would like to discuss any of the matters raised in this Information Note, or have any other questions, please contact John Nelson or Steve Doyle at: advice@dixcart.com.

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ARABIC: The Option of a Second Passport

خيار الحصول على جواز سفر ثانٍ – جنسية سانت كيتس ونيفيس عن طريق الاستثمار

معلومات عامة

مع ازدياد حاجة الأفراد والعائلات للتنقل في السنوات الأخيرة أصبح الحصول على جواز سفر ثانِ أمر في غاية الأهمية. تعد دول الكاريبي من المقاصد الجذّابة لعدد من الأسباب منها نمط الحياة المريح والمناظر الخلابة والمناخ المعتدل. كما أن هناك أيضاً مزايا إضافية للحصول على جواز سفر ثانٍ حتى وإن لم تكن تنوي حالياً الانتقال إلى منطقة الكاريبي.  

لماذا تحتاج العائلات والأفراد إلى جواز سفر ثانٍ؟

هناك عدة أسباب مختلفة وراء رغبة الأفراد الأثرياء في الحصول على جنسية ثانية أو بديلة ومنها:

  • توفير الأمان للأفراد في حال حدوث تغيرات سياسية أو اقتصادية أو ضريبية في بلدهم الأصلي. 
  • تسهيل السفر الدولي. فمواطنو العديد من الدول يضطرون للانتظار لفترات طويلة للحصول على التأشيرات للسفر لعدد من الدول الغربية. وقد يكون سبب ذلك أنهم مواطنو دول نامية أو قد تكون هناك عداوات بين دولهم ودول أخرى.
  • السماح لحامل جواز السفر بتجنب التمييز.
  • تجنب خطر تلقي معاملة قد تكون عدائية من طرف المسؤولين الحكوميين، والخاطفين ومحتجزي الرهائن.
  • توفير فرص جديدة للهيكلة الضريبية بالنسبة لمسائل الضرائب الشخصية. وبشكل عام، يعد مكان إقامة الفرد وجنسيته الأساس النهائي لغالبية الأحكام الضريبية.
  • مواطنو الولايات المتحدة الأمريكية وبعض الدول الأخرى ملزمون بدفع الضرائب على دخلهم العالمي، بغض النظر عن دولة إقامتهم. ولا تتوفر لهم أي فرص للتخطيط الضريبي متعلقة بمكان إقامتهم في حين أنها تتوفر لغيرهم من الناس. ومن الممكن أن يتمتع مثل هؤلاء الأفراد بمزايا ضريبية من خلال الحصول على جنسية ثانية وتنازلهم عن جنسيتهم الأصلية.

هناك عدة خيارات مختلفة بالنسبة للحصول على جنسية ثانية في منطقة الكاريبي. ولكن إحدى المزايا الكبرى لجنسية سانت كيتس ونيفيس هي أنها تضمن حصول الأفراد على جواز سفر سانت كيتس ونيفيس الذي يمنح حامله حقوق السفر الكاملة لدول الشنغن في مختلف أنحاء أوروبا.

برنامج جنسية سانت كيتس ونيفيس من خلال الاستثمار يُمكّن الأفراد من الحصول على الجنسية من خلال 3 برامج للاستثمار البديل. بإمكان الفرد الحصول على جواز سفر سانت كيتس ونيفيس خلال 3 أشهر أو أقل من تاريخ تقديم الطلب.

ماذا يوفر جواز سفر سانت كيتس ونيفيس؟

  • لا يحتاج المتقدمون لطلب الجنسية إلى السفر إلى سانت كيتس ونيفيس لتقديم الطلب ولا توجد أية قواعد تتطلب الإقامة السنوية من أجل الحفاظ على جواز السفر.
  • يمكن أن يشمل الطلب الواحد الأطفال لغاية سن أقصاه 30 سنة والأهل بسن أدناه 55 سنة.
  • تُمكن المعالجة المستعجلة من استلام جواز سفر سانت كيتس ونيفيس في غضون 45 يوم.
  • يتمتع حاملو جواز السفر بالمزايا الكاملة للشنغن وبإمكانهم السفر إلى حوالي 120 دولة حول العالم، إما دون الحاجة للحصول على تأشيرة أو من خلال الحصول على تأشيرة عند دخول البلد. كما يمكن زيارة المملكة المتحدة دون تأشيرة.
  • في حال اختار حاملو جواز السفر الانتقال إلى سانت كيتس ونيفيس، لن يخضعوا إلى ضريبة الدخل الشخصي ولا ضريبة الهدايا، ولا رسوم الوفاة، ولا ضريبة العقارات، ولا ضريبة الورثة، ولا ضريبة الأرباح الرأسمالية على دخلهم المتأتي من جميع أنحاء العالم.
  • يسمح جواز السفر لحامله بالإقامة في دولة أخرى من دول المجموعة الكاريبية (كاريكوم) في حال رغبته بذلك. وهناك 15 دولة عضوة في مجموعة دول كاريكوم.

ما هي طرق الاستثمار في سانت كيتس ونيفيس؟

تتوفر ثلاث طرق للاستثمار وهي:

الخيار 1: المساهمة في صندوق النمو المستدام (SGF)

  • يمكن لمقدم الطلب الفردي دفع مساهمة بقيمة 150.000 دولار أمريكي إلى صندوق النمو المستدام (SGF).
  • Text Box: أعلنت حكومة سانت كيتس ونيفيس عن تخفيض مساهمة الجنسية للعائلة المكونة من أربعة أفراد من 195.000 دولار أمريكي إلى 150.000 دولار أمريكي للعائلة الواحدة بين 1 يوليو 2020 و15 يناير 2021. في العادة، تبلغ قيمة المساهمة لعائلة مكونة من لغاية 4 أفراد 195.000 دولار أمريكي.
  • بالنسبة للمُعالين الإضافيين، بغض النظر عن عمرهم، تكون قيمة المساهمة المطلوبة 10.000 دولار أمريكي لكل مُعال.

الخيار 2: مشاريع التطوير العقاري المعتمدة

  • Text Box: أعلنت حكومة سانت كيتس ونيفيس أنه سيتم خفض رسوم الطوابع من 10% إلى 2.5% بين 1 يوليو 2020 و15 يناير 2021.الاستثمار بمبلغ لا يقل عن 400.000 دولار أمريكي في أحد مشاريع التطوير العقاري المعتمدة. وينبغي الاحتفاظ بملكية العقار لمدة لا تقل عن 5 سنوات بعد منح الجنسية.

وينبغي على المتقدم للطلب دفع رسوم تسجيل ورسوم إضافية مطلوبة للزوجة والأطفال دون سن 18 سنة وأي أفراد عائلة إضافيين فوق سن 18 سنة.

في حال اختيار هذه الطريقة، بإمكان مكتب Dixcart في نيفيس المساعدة في توريد خدمات إدارة العقار الذي يمكن بيعه بعد 5 سنوات.

الخيار 3: العقارات الفاخرة

  • Text Box: أعلنت حكومة سانت كيتس ونيفيس أنه سيتم خفض رسوم الطوابع من 10% إلى 2.5% بين 1 يوليو 2020 و15 يناير 2021.الاستثمار بمبلغ لا يقل عن 200.000 دولار أمريكي في عقار فاخر جديد. وينبغي الاحتفاظ بملكية العقار لمدة لا تقل عن 7 سنوات بعد منح الجنسية.

وينبغي على المتقدم للطلب دفع رسوم تسجيل ورسوم إضافية مطلوبة للزوجة والأطفال دون سن 18 سنة وأي أفراد عائلة إضافيين فوق سن 18 سنة.

المُعالون

يمكن شمل الأطفال غير المتزوجين والمُعالين فوق سن 18 سنة ودون سن 30 في الطلب. كما يمكن أيضاً شمل الأهل بسن 55 فما فوق في الطلب. ويمكن منح الجنسية للأجيال المستقبلية على أساس النسب.

المعاملة المستعجلة

تستغرق مدة معالجة أي من الطرق الثلاث المذكورة أعلاه للحصول على جنسية سانت كيتس ونيفيس حوالي 3 شهور. ولكن، بمقابل مبلغ 46.000 دولار أمريكي، يمكن استعجال الطلب واستلام جواز السفر في غضون 45 يوم تقريباً.

معلومات إضافية

Dixcart هي شركة تقديم خدمات مُرخصة لبرنامج جنسية سانت كيتس ونيفيس من خلال الاستثمار وبإمكانها تقديم التفاصيل الشاملة حول الطرق البديلة المتوفرة لتقديم الطلب وأية رسوم إضافية قد يلزم دفعها والمساعدة في تنسيق الطلبات.

إذا كنت ترغب بالحصول على المزيد من المعلومات حول برنامج الجنسية الاقتصادية لسانت كيتس ونيفيس يُرجى الاتصال بغراهام ساتكليف (Graham Sutcliffe) في مكتبنا في نيفيس: advice.nevis@dixcart.com أو بشخص الاتصال الذي تتواصل معه عادة في Dixcart.

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Trusts and Foundations: A Q&A

A Changing World

Particularly, in light of the recent Covid-19 pandemic, many individuals are considering how they can best protect their family health and their family wealth, across future generations.

Many have already set up family offices and use Trusts and/or Foundations as wealth preservation vehicles within these.

This Article is intended for those considering taking such steps.

Dixcart has offer 45 year of experience in helping establish Trust and Foundation vehicles and providing Trustee services. We are licensed to offer these services across the six jurisdictions of; Cyprus, Guernsey, Isle of Man, Malta, Saint Kitts & Nevis and Switzerland.

What will be most appropriate, depends on your circumstances and we strongly advice that you take professional advice: advice@dixcart.com.

Questions and Answers

What is the History in Relation to each Vehicle?

Trusts have been used in common law countries for many hundreds of years, for a variety of reasons. With the development of international business, international tax and estate planners were quick to realise the benefits of using offshore trusts in mitigating tax liabilities and assisting in the flow of family wealth through the generations.

Historically, clients from civil law countries have been more familiar with the concept of the Foundation. However, now they are becoming increasingly aware of the benefits of Trusts, and it is the same in terms of common law countries and Foundations.  

How Can a Trust or Foundation Help Preserve Wealth Across Future Generations?

It is a legal arrangement where the ownership of the ‘Settlor’s’ assets (such as property, shares or cash) is transferred to the ‘Trustee’ (usually a small group of people or a trust company) to manage and use to benefit the ‘Beneficiaries’, a third person, or group of people, under the terms of a Trust Deed.

A Foundation creates a separate legal entity with its own legal personality, distinct from the ‘Founder(s)’, who transfers assets into the Foundation, the ‘Council’ manage the Foundation and the ‘Beneficiaries’, benefit from it.

Charitable foundations are the most common and the majority are set up to exist in perpetuity. This means that control over the foundation and its assets can be passed to countless generations of the family.

Are Trusts and Foundations ‘Private’?

In most jurisdictions, no requirements currently exist to register a Trust or for any document or information in connection with the Trust to be placed in the public domain, and the arrangement may therefore be kept completely private.

Limited information in relation to Foundations will be publicly available, but there is currently no requirement that the identity of the Founder, Beneficiaries or purposes of a Foundation should be made publicly available.

Trusts and Foundations can, therefore, both be private arrangements under current rules.

What are the Key Differences Between a Trust and a Foundation?

A number of the key differences are outlined below:

  • A Trust is not a legal entity; a Foundation is a registered legal entity.
  • The ownership of the assets in a trust rests with the Trustee whilst the Foundation owns the property concerned directly.
  • by its Charter and Articles or regulations.
  • Potentially, a Foundation provides more certainty than a Trust and it is less likely to be treated as a potential ‘sham’, particularly in civil law jurisdictions.
  • information and they generally do not have any equitable or other forms of ownership of foundation assets.
  • Trusts are intrinsically more flexible than Foundations.
  • A Trust can be used for commercial purposes but Foundations, except under limited circumstances, cannot be so used.

What are the main Reasons for having a Trust or a Foundation, in addition to Wealth Preservation?

In addition to the preservation of wealth, selected distribution of assets and favourable tax treatment, Trusts and Foundations are used to achieve the following:

  • Circumvention of forced heirship laws
  • Asset protection
  • Confidentiality
  • Continuity on death
  • Philanthropy

Dixcart Offices Regulated to Provide Private Client Services:

Dixcart has six offices with extensive expertise in providing Private Client Services, including the provision of Trusts and Foundations:

  • Cyprus: Dixcart Management (Cyprus) Limited is regulated and holds a full fiduciary licence under the Cyprus Securities and Exchange Commission.

Email: advice.cyprus@dixcart.com.

  • Guernsey: Dixcart Trust Corporation Limited is regulated and holds a full fiduciary licence under the Guernsey Financial Services Commission. Dixcart Trust Corporation Limited is a member of the Guernsey Association of Trustees. Email: advice.guernsey@dixcart.com.
  • Isle of Man: Dixcart Management (IOM) Limited holds a full fiduciary licence and is regulated by the Isle of Man Financial Services Authority. Dixcart Management (IOM) Limited is a member of the Association of Corporate Service Providers.

Email: advice.iom@dixcart.com.

  • Malta: Elise Trustees Limited Dixcart House is regulated and holds a full fiduciary licence under the Malta Financial Services Authority.

Email: advice.malta@dixcart.com.

  • Nevis: Dixcart Management Nevis Limited is regulated and holds a full fiduciary licence under the Financial Services Regulatory Commission.

Email: advice.nevis@dixcart.com.

  • Switzerland: Dixcart Trustees (Switzerland) SA is a certified member of Swiss Association of Trust Companies (SATC). Dixcart Trustees (Switzerland) SA is affiliated to “Association Romande des Intermédiaires Financiers (ARIF)” a Swiss self-regulatory organization (SRO) officially recognised by Swiss Federal Financial Market Supervisory Authority (FINMA).

Email: advice@switzerland.com.

Summary and Further Information

Trusts and Foundations can be used to achieve many objectives. The choice of jurisdiction for a Trust and/or Foundation is important and is generally governed by the specific circumstances of each family/family office.

If you would like additional information, please speak to your usual Dixcart contact,  one of the Dixcart offices above, or email: advice@dixcart.com.

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